Our small-business columnist, Jessica Lee, has moved on to a new gig handling media relations for Newport Beach law firm Stradling Yocca Carlson & Rauth. I’ve taken over the Business Journal’s column covering smaller businesses of all types, which I’ve dealt with before as part of my work covering manufacturing for the paper.
More conservative spending by new parents could create business, according to Renee Pepys Lowe, chief executive of Costa Mesa-based CoCaLo Inc.
CoCaLo, which makes and sells children’s nursery items, is looking to extend its 10 years of growth since it was founded, even during the recession.
Demand for children’s nursery items is stable in good times or bad. But the business isn’t immune to shifts during a down economy.
Expectant parents are putting off purchases until closer to their due dates, Lowe said. They’re showing more interest in functionality over design, she said.
“This will be a separator-of-the-pack kind of market,” Lowe said.
CoCaLo’s nursery bedding sets sell for $130 to $300.
Lowe said she wants to gain sales with changes in products and pricing.
“This is a unique industry with a lot of emotions from its buyers,” she said. “They still want brand new bedding.”
The Business Journal estimates CoCaLo does more than $20 million a year selling to more than 400 stores such as Babies “R” Us, J.C. Penny, Burlington Coat Factory, Kohl’s and smaller boutiques.
The yearly market for children’s nursery items has been estimated at more than $4.5 billion. Big players include Atlanta’s Carter’s Inc., which makes a variety of products.
Others include Banana Fish Inc. of Northridge, Los Angeles-based Lambs & Ivy and Compton-based Crown Crafts Infant Products Inc.
Last year, New Jersey’s Russ Berrie and Co. bought CoCaLo for $16 million. It also owns children’s goods makers South Gate-based Kids Line LLC, New Jersey’s LaJobi Industries Inc. and Grand Rapids, Mich.-based Sassy Inc.
The CoCaLo Baby product line is the mainstay of CocaLo Inc. with items such as blankets, sheets, pillows, wall decorations, diaper stackers, lampshades and mobiles.
The brand was started in 2004 and went from making up 2% of sales to about half.
The company also has CoCaLo Couture, theme driven sets of nursery bedding and CoCaLo Naturals, an environmentally friendly line. Baby Martex has classic designs.
The company em-ploys about 30 locally in a 13,000-square-foot facility used to run its operations, sales and designs.
Manufacturing is outsourced to companies in China and India.
Lowe learned the business from her mother, who started NoJo Inc.,a similar business in Rancho Santa Margarita in the 1970s. Lowe eventually took it over and sold it.
CoCaLo began with two workers in 1998 and was named after Lowe’s kids Courtenay and Catherine Lowe.
While the industry has changed through the decades, the basics are the same, Lowe said.
The key to making money in the business is to stay disciplined and plan well, she said.
“We’re going to deviate a lot, but at the end of the day there’s a plan,” Lowe said.
Trust But Verify
New Food and Drug Administration rules have been good for Alkemists Pharmaceuti-cals Inc. in Costa Mesa.
The family company tests for authenticity of ingredients used in food products. Alkemists doubled its revenue to the low seven figures last year, according to Chief Operating Officer Elan Sudberg.
When the government required food companies with more than 500 employees to ensure their products were made with what they claimed to be, it sent an instant flow of business to Alkemists, he said.
An expansion of the rule to cover companies with 20 to 500 employees could mean more business, according to Sudberg.
“We already expect to double our revenue again this year,” he said.
The company has five big customers, which it isn’t allowed to disclose.
“But they’re very recognizable,” Sudberg said.
Most customers are smaller companies dealing in the health food business, such as Wisconsin’s Nature’s Way Holding Co., a maker of vitamins and herbal supplements. It also services companies that supply ingredients to manufacturers such as France’s Naturex SA, which deals in extracts.
Sidney Sudberg, a former chiropractor with a passion for chemistry, started Alkemists 11 years ago. He’s president of the company.
Alkemists has about 15 employees. It won’t have to hire to handle more work, according to Elan Sudberg.
“We try to automate as much as we can,” he said.
Verifying the chemicals is done by looking at the ingredients under a microscope or by mixing them with chemicals.
“Plants have chemicals in them that are like a fingerprint,” Sudberg said.
